JCDecaux reports flat transport revenue in year of two halves; seeks and grants contract relief

Jean-François Decaux: “During the past few weeks, we have been talking to our clients/advertisers and we are supporting them with exceptional temporary reliefs”

INTERNATIONAL. JCDecaux’ s Transport arm posted a mixed year in 2019, with revenues for the subdivision up just +0.3% to €1,636.4 million (US$1,823 million).

The world’s largest out of home advertising company, which was present in 167 airports during the year, said the non-renewal of its loss-making contract with AENA in Spain and a drop off in business in Hong Kong impacted revenue in the second half of the year.

“A fairly flat Transport segment, with [a] very contrasted valuation from H1 of +8.1% to -5.7% in H2, [was] impacted by political events in Hong Kong, a slowdown in our subway business in Mainland China and to a lesser degree by the non-renewal of the onerous airport contract with AENA in Spain,” JCDecaux Chief Financial & Administrative Officer David Bourg said.

JCDecaux’s extensive global airport presence showed a mixed performance by region

Digital advertising continued its rise in importance within the Transport business, accounting for 30.3% of revenue, up from just 17.5% as recently as 2015.

The increasing importance of digital revenue for the Transport division

JCDecaux Chairman of the Executive Board and Co-CEO Jean-François Decaux added: “Our Transport digital revenue has been steadily growing and now accounts for 30.3%, with a revenue growth acceleration this year with +27%. More growth is to come with the acceleration of our top line in new contracts won, such as Beijing Daxing in China, Kansai in Japan or [the Midfield Terminal at] Abu Dhabi in the UAE.”

“All our landlords in China fully recognise the significant setback for the advertising business and have all already expressed their intention to grant us rent reductions” – Jean-François Decaux

Adjusted Group revenue for the year divided by segment and region

Overall adjusted revenue for JCDecaux rose +7.5% to €3,890.2 million (US$4,340.3 million) for the 12-month period.

Commenting on 2020 prospects, Jean-François Decaux said the COVID-19 outbreak would impact performance this year. As reported, the company has been in discussions with major Asian airports regarding concession relief.

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Decaux added: “Looking at Q1 2020, we expect our adjusted organic revenue to be down around -10%, despite positive current trading in Street Furniture, reflecting the very material impact from the COVID-19 outbreak and taking into account the Q1 2019 high comparable in Transport.

“In Asia Pacific, our business has been significantly affected since the beginning of February, with a very important decline in China in passengers and commuters in the airports and metros where we operate. All our landlords in China fully recognise the significant setback for the advertising business and have all already expressed their intention to grant us rent reductions.

“During the past few weeks, we have been talking to our clients/advertisers and we are supporting them with exceptional temporary reliefs. Regarding travel retail, most of our clients want to keep their premium locations and their long-term commitments in our airports.

“Given the magnitude of the COVID-19 disruption, our group operating margin should be negatively affected in 2020, despite saving measures being implemented, without compromising our operational quality and efficiency, to mitigate the impact. With strong and effective measures notably taken by the Chinese government, a rebound of the economic growth could pave the way for a recovery with consumption and investment activities resuming, once the epidemic is under control.”

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